[ndiddy]

Using satellites to transmit the game data wasn't TOO exotic, I imagine they did it because all the cable headends were already set up to receive national channels carried over satellite. Having centralized control of the game server also let them switch out the game images for timed events such as competitions. For regions outside the US, Sega went the simpler route of putting game servers at each headend and mailing out CDs each month.

It makes sense that it was unreliable in certain areas, cable TV was analog back then so cable providers didn't really have to worry about signal noise being a serious problem until Sega Channel came along.